In Depth

When cyber thieves hacked into the computer system of retail giant Target, consumers were stunned at the
amount of personal financial information that was pilfered.

But on the black market, stolen credit card and pin numbers do not bring much money per number. The real dollars are paid
for inside details about possible mergers and acquisitions, new public policy, and information about cutting-edge technology.
In short, the kind of private, confidential information that many law firms hold in their client files.

Describing himself as a “bit geeky,” attorney Jeffrey Kosc has always included cybersecurity
issues in his legal practice. The Benesch Friedlander Coplan & Aronoff LLP partner said hackers are constantly trying
to breach computer networks to get confidential information.(IL Photo/Aaron P. Bernstein)

Increasingly, cyber thieves are attacking law firms, and while large firms are the prime targets, firms of any size can be
hit. Hackers can enter a system through a link in a phishing email or by a virtual backdoor in the software.

The bad news is the hackers will come. Law firms should no longer be asking what they should do if their network is breached,
but rather they should ask what they will do when they get hacked.

The worse news is law firms may not know when a breach has occurred. Cyber thieves can break into a system and remain there,
undetected, for a significant period of time.

“It’s the world we live in,” said Jill Rhodes, attorney and cyber expert who served on the American Bar
Association’s Cybersecurity Legal Task Force. “It’s just the way we live now. No one is going to protect
us but ourselves.”

Verizon’s 2014 Data Breach Investigations Report found 63,437 security incidents based on data submitted by 50 contributing
organizations covering all sectors of the economy. Of those incidents, the professional sector, which includes lawyers, suffered
360 breaches.

The report found that the professional category of businesses was most hit by denial of service attacks which are intended
to compromise networks and systems. The second most common mode of attack was cyber-espionage or unauthorized access with
motive for spying.

Rhodes

Based on Verizon’s methodology, 87 percent of the actors committing cyber-espionage were affiliated with a nation state
while 11 percent were from organized crime and 1 percent was linked to competitors. Forty-nine percent of the incidents were
attributed to entities in East Asia while 21 percent were in Eastern Europe.

Ten years ago, hackers were breaking into systems and doing things like defacing websites to make a name for themselves.
They wanted the public to know who they were and what they had done.

Now, hackers are more sophisticated. They look for ways to gain entry; then they work to breach the layers of security to
get to as much data as possible for economic gain.

Nicholas Merker, attorney in the intellectual property and litigation group at Ice Miller’s Chicago office, explained
today’s hackers do not want to get caught. They want to lie in the weeds for as long as they can and siphon information.

Protection

Cybersecurity has been part of Jeffrey Kosc’s practice since his first day on the job as an attorney. He had just been
hired as in-house counsel for True Value hardware stores and accepted the task of reviewing a software agreement after the
other attorneys confessed they were not too sure what software was.

Nearly 20 years later, Kosc, now a partner at Benesch Friedlander Coplan & Aronoff LLP in Indianapolis, said constant
attacks are the trend.

Hackers are “always trying to get in and always trying to stay one step ahead,” he said.

Law firms are attractive to cyber thieves not only because of the type of confidential information harbored but also because
attorneys tend to use their own devices. Lawyers who work out of the office accessing files on the cloud with their own tablets,
laptops and phones can create an additional vulnerability in a firm’s network.

A hacker needs only hours or days to break into a system, while a business might take weeks or months to discover the breach.
Protecting against attacks includes changing passwords, using encryption programs, limiting access to extremely sensitive
documents and having the ability to wipe data from any phone or computer that gets lost.

Also, firms should negotiate security agreements with vendors to clearly spell out what the expectations and responsibilities
are. The average consumer will not be able to negotiate the usage agreement for iTunes but, Kosc said, a law firm making a
significant investment in programs will have leverage to change the terms to ensure greater security.

Merker

There is no magic bullet to protect against all cyberattacks, said Scott Shackelford, attorney and fellow at the Indiana
University Center for Applied Cybersecurity Research.

Defending against breaches, Shackelford continued, requires constant vigilance and starts even before the new computers arrive
at the office. Devices can be purposefully contaminated with viruses at the factory so law firms, just like any business,
should be working with vendors to ensure the supply chain is safe.

The weakest link in the protection chain is people. A 2011 test of cybersecurity by the U.S. Department of Homeland Security
proved this. The agency tossed disks and flash drives in parking lots of other federal offices and contractors and found that
employees picked up the items and inserted 60 percent of them into their computers.

Technology alone will not fix the problem, Merker said. Law offices have to change their cultures and implement training,
policies and procedures for employees. The attorneys and staff need to know what to be leery of and how to avoid attacks.

Still, even with all the protections, Rhodes, vice president and chief information security officer for Trustmark Cos., believes
a costly, high-profile attack is inevitable.

“I think there will be at some point – if not already – a significant lawsuit related to some sort of breach
that resulted in a client losing a case,” she predicted.

Bottom line

A hacking incident in 2010 in which Canadian law firms were breached and sensitive information about a potential corporate
takeover was accessed has been highlighted as an example of how vulnerable law firms are and the type of information available
on a firm’s computers.

Indeed, in late 2011, the FBI met with New York’s Top 200 law firms to warn the attorneys of attacks and provide them
with ways to prevent breaches.

Mounting and maintaining a defense against hackers does create a new line item in a law firm’s annual budget. However,
law firms that skimp on protection now will actually start building what has been called a security debt. The longer the firm
delays putting needed resources into cybersecurity, the bigger the debt grows until finally a breach occurs and the debt comes
due, potentially making the cost to mitigate much higher.

Most states have data security laws regulating businesses and agencies. Indiana requires database owners to “maintain
reasonable procedures to protect and safeguard” the personal information of Hoosiers. If a breach occurs, database owners
must make notification without “unreasonable delay.” Failure to disclose the breach is a deceptive act that could
bring a civil penalty of up to $150,000 per act.

The bigger consequence is the loss of client goodwill. Firms could have their reputations damaged and lose current and future
clients. While customers tend to forgive when a store loses their personal financial information, Merker is not sure if clients
would forget a breach at a law firm. The stigma of breaking clients’ trust and not keeping their information safe could
be hard to erase.•

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